tv Fast Money CNBC March 13, 2012 5:00pm-6:00pm EDT
another increase in dividends with it. and four banks failed the stress tests. sun trust, allied financial, citi group, and met life. have a great evening. try not to be stressful. i'll see you tomorrow. no stress here. nooim for melissa lee. here are tonight's top trades. bank surges. jpmorgan hikes its dividend and says our buyback is so way bigger than yours. and the feds wage the course what should you do? and did you miss the blowoff top? plus real money in real estate. we're going to talk about reits to a reits expert. ammann has breaking news. >> we have a statement here from goldman sachs. goldman sachs announcing the federal reserve did not object to goldman's actions through the first quarter of 2013 including the repurchase of outstanding
common stock and a potential increase in its quarterly common stock dividend. that's the news from goldman sachs as of right now. also we have got a statement here from met life. met life issues a statement regarding its participation in the fed's stress test here. met life saying met life is financially strong and well positioned for both the current environment and a potential further economic downturn. we are deeply disappointed with the federal reserve's announcement. we do not believe that the bank methodologies used are appropriate for insurance companies which operate under a different business model. so couple of big statements coming out just now. back to you. >> all right. thanks so much. let's start trading. financials on fire today after that big hike from jpmorgan with the dividend of 20%. the bank stress test revealing some weak links. citi group, sun life, met life. you sold some jpmorgan today. >> i've loved jpmorgan for a
long time. i think that none of this news today was surprising that they would increase their dividend. we know they'd like to do a buyback. yet the performance of the stock i think makes the likelihood of being able to do the buyback at the scale they announced unlikely. they try to be judicious in their buying back stock. they were able to buy in the low 30s in the last quarter or two. >> so much for that. >> so much for that. now it's well north of book value as a pe multiple it's not expensive, but it certainly isn't as cheap as it was. so sadly, much as i love jamie dimon, i had to sell a little bit of jpmorgan into this rally. >> big crush on the show, jamie dimon as i understand. >> not everybody. >> right here. >> to your left and perhaps you as well. and obviously melissa who's sick again today. 80 million shares jpmorgan
traded today. much more than normal volume. you wonder if they'll get around to 1/3 of that. pete and john have been all over this. when you have a day like today in financials, this is what people have been waiting for. the entire move has been anticipating this. i still think we have a chance. we'll talk about that. but i think the thing now the financials have officially gotten long here. >> this wasn't supposed to happen today. what happened? i mean, they blew a hole in your run down here, the federal reserve did. >> and i'm sure they're deeply disappointed. look. the federal reserve said it was going to come out with these results on thursday. jpmorgan at 305 :04 put out a statement. that cousined the federal reserve to move up the release to 4:30 this afternoon and telling us that 15 of the 19 had passed and four had not.
sun trust, citi group, met life. and there's a -- i just want to underscore what ammann told you. this very sharply worded statement from met life says hey. you can't treat us like a bank. we're an insurance company. by the way, it's important to note that met life did pass on what you might call the headline number. 5.1% tier one ratio at the end of the stress test which is as good as the other guys. but it failed on just one of the four metrics which is the risk capital after the stress test. and they're saying we have 3.5 billion of excess capital now. by the end of this year it will be 6 to 7 billion. what we don't know is wlorpt they asked for and were denied dividend increases or share buybacks. and now what we're waiting for, the next shoe to drop are those who haven't come out yet and told us are they going to be hiking their dividends or hiking
their share buybacks. that's where the trade is. what i'm told is jpmorgan's numbers are higher than expected by the street. both sooner than expected and higher. >> i would look at regions financial. traded as low as 5.35 in the after-hours. it's now trading at 5.80. i think you want to be a holder of equity after recapitalization. if they can do this, pay back the tarp and they pass the stress test, this is the place you want to be. >> everybody and their brother and sister was looking for this catalyst. just fast forwarding it created a more impressive blowoff top. i missed the top. then i shorted the blowoff top. then i was wrong by about eight points into the close on that top. but when you look at this closing high, you've got to look at what creates a blowoff top and expressing the s&p futures into that event with dimon saying i run your show. and printing that thing, i think
that creates the blowoff top. >> what is a blowoff top? i don't know what you're talking about. >> it's a jargon we throw around. >> watch for a blow-off top. >> that's me, by the way. a thinner me. our thesis has been if the market doesn't give you this much time to buy the lows or sell the highs. then you see a day like today where the s&p rallies. i think there's still another 25, 30 left where the bears just say we're done. we can't take this anymore. it's over. and the people that have been waiting. that's what creates a blow-off top. i thought this was going to happen thursday when we were supposed to release these numbers. it happened today. i think you've got a couple days maybe into monday. i wouldn't get caught up in this. if you have positions, you're buying puts because the vix is cheap. keith will speak to that later. maybe sell some calls.
but i would be looking to pair down positions for sure. >> and guy's been all over this. i think the flows that are going to happen. asia slows. the u.s. seems to be the best place to invest now. you're going to get these dollars coming into here. my target is about 1450. i would agree with guy you want to buy puts here. i liked that coat there. >> it goes good with the blow-off top. >> karen, what are you doing here in the face of this rally? >> i'm not sure how i got the white top hat. >> that arch to the back is so. >> reporter: well, it's my model. >> kudos to these guys. guy's been talking about it every day he's on here. i think you've got to sell into this. nams like disney. we sold some disney today, apple calls today. bought some out of the money puts today. am i going to be able to time the topper and bottom and
everything perfectly? absolutely not. but i've got to scale into it and activity like today makes me need to do it. >> europe is so pa say, right? >> it reped create the blow-off top. >> i'm happy to not be talking about it. that's my point. is fred cannon ready? talk about breakdown with all the banks. fred, you there? >> i am here. >> wow. what do you make of this move by jpmorgan to come out first and force the fed's hand? is that the way to read it? >> sure looks that way. everybody was set for thursday. then the fed's forced to move. >> and look. bernanke, there's little politics in this. bernanke is starting to make jamie dimon irritated on the long end of the curve.
that's how dimon gets paid from here. he has to basically create some cash earnings on the net interest margin that is associated with the yield spread. what do you think this looks like from here on the dimon versus bernanke battle? >> well, the big key there is no more qe and no more this operation twist. if we can get past that this june, then i think we can start to see exactly right. we need some steepness in the curve for these banks to make money. in the meantime buy back shares. >> the nour banks that messed. met life, citi, alli. >> we've been saying buy the stronger banks. they're the winners. and the ones that have rallied the most this year have been the bank of americas. and the weaker ones. those ones missed this test. no, i think you have to stick with the winners after the results today. >> fred, real quick. u.s. bancorp trading -- that's a stock making a new 52-week high
as opposed to just rallying. they announced a hundred million share buyback. but does the valuation -- do they still deserve the valuation? 13 times trailing, maybe 12 times forward earnings. you still love it here at 31. >> to us it feels like it's one bank you can feel good about the earnings. that worked last year even though they were expensive. with the r.o.e. they can produce with the income they produce, we do think it's a good place to be. you look at the cheaper, jpmorgan with the success today. wells fargo with the jump in the dividend above expectations. so the quality names, there's a number of them. >> fred, brian kelly. what about citi bank? trade it off here? is there an opportunity to buy it here. then they may be in e in e same position as some of these banks that have rallied. >> i like that trade. i think citi posts this as something we were looking for. the problem for citi was it
didn't stack up well for this test. once we get past this noise, we think no only can they improve business and money, they will recapture that deferred tax asset which can push capital up. >> thanks so much. let's go to you. what's your idea as you join us on the fast line? >> listen. in terms of plays here, guys on the desk were talking about maybe taking profits in names like jpmorgan. selling those stocks. i still want to own the financials to some degree. met life is a good one to sell off. i would agree with some of their arguments here. maybe oversold in the markets. one thing i think that plays into this market, the financials. when they rally they're a big portion of the s&p 500 you have to be careful. a blow-off top doesn't occur in one day. you need a reversal. with the days of 2% or greater
moves. this could be relative strength just happening in the market. financials pulling the market higher. you have to be careful to sell a good portion in this. just sell calls against my position to take a bit of profit. >> thanks so much. next trade. let's hit the volatility playbook. the vix holding at levels not seen since 2007. keith, you say buyers stock should be aware of this. >> you do not want to be wearing one of those hats in the thing we just showed. between march and april of 2008, 2010, 2011. do you want to do this again? how many times do we have to take the vix to 1415 and create a story telling exercise that the banks are cheap, japan's not going to happen. i could go on and on. but the story has been equally impressive every time the vix has hit this level. every time you should have been selling stocks. >> does his position make you wrong or can it coincide because you're saying at least for a couple days.
>> i would keith would agree we've all been surprised by the magnitude of the rally. i think you're going to be surprised the next couple days that this continues. but i think his point about the vix being here and sort of bad things to come is probably accurate. i just think we have another 30 or so s&p handles. you do what you want. i would not go racing in banks here. i think we can both be right. >> and the best thing about that is options are cheap. and that's really the way the play is. trying to buy the vix, i've never had luck doing that. but you can buy puts that are extremely cheap right now. protect your whole portfolio and sleep well at night. >> one of the things to look at is the vix options. we're at the widest spread. if you want to buy protection on volatility, nobody believes ben bernanke. nobody believes that china's slowing is not going to effect the rest of the world. so at the end of the day,
bernanke is removing the ability of the market to manage risk using the vix. that's an important point. there's probably cheaper ways to own puts. >> i didn't understand something that you said. are you saying bernanke -- nobody believes that bernanke can do it? i'm not understanding what you're saying. >> if you go through the 2008, 2010, 2011 tops in the s&p 500 which are march to april, every time you've been burned chasing this concept of an economic recovery. growth completely came unglued last year. now it's unglued in the eastern side of the world. what the market's doing is starting to pay a premium to brian's point on the vix as you move out the curve. people don't fundamentally trust this rally. >> do you believe that the u.s. economy is in recovery? >> no. i think u.s. gdp growth could get cut in half.
that we use in the fourth quarter. gdp could be 1.5%. >> what. we're the dog with the least fleas? >> great. >> so you're going to own treasuries? >> like me for myself having not blown up in '08, '10, '11, what i like to do is raise cash. i don't believe in having to chase yield, having to target a return. i think it's crazy. >> all right. next on "fast money" kwb is the tides about to turn in the treasury trade? this has been going on for decades, this trade. it worked today. will it keep going? doug kass joins us up next.
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welcome back to "fast money." we are showing you there on the wall the four banks that missed some of the metrics. met life, sun trust, alley, and citi. what do you do with this name? one of the big names that was going to suffer was bank of america, people thought. bank of america passed and citi didn't. >> i think you buy citi group here. i think they will raise the capital. look at the price action in this. trading above 35 now. the high over the last couple months have been 34.87. this is probably the worst news to come out on this stock. and it's not even breaking below the breakout point. that to me is positive price action. and you have something to shoot against as well. >> he likes the technical action. what do you think? >> i think it's interesting. one thing i'd like to know, how can they raise capital to be sufficient? do they have time to grow into it? do they need to issue stock.
if they were to do a big equity issue. it's not like they're capital deficient at the moment. it's if these assumptions were to be our new reality, in that scenario, citi bank has insufficient capital. but we're not in that scenarisc. once i get that question answered, i do think citi is interesting. >> let me take my trader hat off. generally i don't do this. b there are folks that think they could trade $8 to $10 is share in the next two years. do you buy it necessarily on this little wash here? you probably can dip your toe. it's had a tremendous run. some of the smartest people, out of all of them citi sets up the best. >> we're just getting the
statement in. citi saying the fed released the hiefl stress test, the results showed that citi exceeded without the capital action citi proposed. however, the federal reserved citi that it objected to citi's proposed return of capital to shareholders in light of the federal reserve's actions citi will submit a revised capital plan later this year as required by the applicable regulations. so citi saying that the fed has objected to its proposed return of capital to shareholder. and you have seen this afternoon we've seen a lot of banks going ahead announcing they are going to do that. citi saying the fed objected in their case. >> does that answer your questions? >> i think it does. they're not allowed to pay a bigger dividend in buyback stock, that's good. then we're not seeing an equity offering from them which is different. >> brian, what's the options trade here? >> one thing we saw that happened later? the day is the option trader
come in and sold 16,000 april 28 calls. that equates to about 1.6 million shares being sold above $38 a share. after the close and it would be a bearish bet on citi group. >> what'd you say? >> that's just dirty. somebody buying those at 38, somebody always knows something. for people to do this in front of news, admit that you did it. that is what it is. i think brian's right on the levels though. first of all, you've got a group that nobody was long at the beginning of the year. citi is a huge group. you have to cover the stock. if you have the puts, congratulations. but again, there's a serious problem with citi group missing. this was the easiest test to make up. don't forget it is a made up test. if you can't pass that draconian test, you've got big problems in the mortgage book. >> brooip, to keith's point,
what about the overall level of options action when it comes to today? >> there was a little bit. jpmorgan we saw bullish activity occurring. on the flipside, people wanting to get into jpmorgan, we saw other bullish activity. a little bit of out of the money call in xlf. some of these you have to play a name by name basis. the upside capped at the $38 level. >> all right. thanks, brian. let's go to doug kass. going to talk to him about treasuries in a second. what are you doing in the wake of what happened today, doug? >> mc square sd? >> yeah. >> i'd kb inclined to sell out of the entire group. >> just poof you're done? >> done. >> pretty definitive. we brought you on because you were shorting treasuries. i've been at cnbc for 20 years,
i've got one piece of advice. whatever you do, don't buy the long end of the curve. and the one thing you should have done for the last decade was buy the long end of the curve. if you are right on this position, you are making a call of epic proportions. what makes you right right now? >> well, i know you cut your teeth on the bond market, michelle. and as you recall, about 30 years ago, bonds were known as certificates of confiscation. i think they'll come back to being known as that. just a quick perspective. bonds have had a total return in excess of 50% since the beginning of 2010. and that's probably the best asset classic stat with the exception of apple which is its own asset class into itself. if you look further at the market in bonds, has really persisted during the last four decades. there are only four years where
you have a total return of negative 5% or more. this industry which has been considered a risk free asset class, i think it's going to be a return free asset class that's very risky. so there are basically five reasons. the first thing important is the flight to safety is going to diminish. we're seeing progress on the european front which you've covered great in the past couple weeks. lower sovereign debt yields. confidence in the world's entire financial system is improving. and the fear trade seems to be dissipating with gold. i think that the relationship steve cortez says between gold and the s&p is at the lowest level in seven months. >> all right. guy's got a question for you. >> dougie, connect the dots for me. this could coincide with what could be the top of the equity market. maybe another 30 or so handles in the s&p. can both go down? can the equities go down as well
treasuries? >> that that happens. you know, we're -- you know, look at the ten year note, it's yielding 10.1%. it broke out of a six-among range. approximately one-half the yield it was in the recession of the 2000s and bondholders are accepting a negative real rate of return compared to the implied inflation rate wrich are 232 and at the highest price since august of last year. >> doug, hold on we got breaking news on pnc bank. >> we've got more detail here on pnc financial. announcing today that the fed accepted its capital plan and did not object to the capital actions. which included recommendations to increase the quarterly common stock div debd. and a modest share repurchase program under pnc's existing common stock repurchase authorization. another detail here from this pnc release that's important to get to. they're saying the board of
directors is expected to consider an increase in the quarterly common stock dividend at its next scheduled meeting on april 5th. >> all right. thanks so much. brian, you want to talk to doug. >> got a question for you. hey. you made a very good call on xlf saying i believe you thought it could double over the next two years. it's done fairly well. now you're saying sell bonds. if you're selling bonds, yields on the long end are going higher, the yield curve is getting steeper and you're selling out of xlf. connect the dots there. >> my concern with the banks over the next couple months is more in line with what keith mentioned. that the economic -- there's increasing economicbiguity and abroad. >> wouldn't that be positive for bonds then? if you have -- >> my whole case is that bonds
can get decimated even in a muddle through which is my baseline economic case environment. and i attempt to put the flight to safety premium into perspective. if you look at bonds, bonds the ten year and the 30 year yields. they typically track two things. they track nominal gdp. inflation is about 2.3%. >> so they should remain flat then. you have 2% gdp so it's not a great short then. >> no. i think -- >> that's what i don't understand. >> i think b that the ten year -- i think there's a hundred basis upside to the ten year and 30 year. >> if you don't have muddle through and own an option on credit risk, something that got lost in the news was that u.s. printed its largest deficit in u.s. history. now, that at a point may never matter. maybe it does. and do you look at the position in any way shape or form.
>> let me just respond quickly to that. i think you're on an important point. which is one of my keys. it's the failure to address our fiscal imbalances. could haunt the bond market. it seems to me that the november elections could result in gridlock. this would encourage the bond vigilantes and further alienate bankers who have in the past had these notes. >> thanks for joining us. >> thank you. >> all right. here's what i don't understand. if you're going to have a selloff in bonds and in stocks, what's left? your mattress? >> i like me mattress in that situation. >> actually a selloff on bonds could trigger a selloff on stocks because there's less of a reason to own those assets. if you're getting on your treasury, then you have a positive yield. when there's a negative yield, you want to own things like stocks. i think you could have the relationship. but i would disagree with doug.
before the vigilantes take aim on the u.s., look at japan first. >> all right. as we head to break, look at citi shares falling after-hours. next on "fast money," how to trade a rebound in real estate. it's after the break. more "fast money" up next. tdd# 1-800-345-2550 let's talk about fees. tdd# 1-800-345-2550 there are atm fees. tdd# 1-800-345-2550 account service fees. tdd# 1-800-345-2550 and the most dreaded fees of all, hidden fees.
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welcome back to "fast money" live at the nasdaq market site. time now for our "fast money" portfolio. this is a new feature where long-term investing meets the volatility of the world. up next is green street advisers. the firm focuses on commercial real estate and real estate investment reits. good to see you. give us your outlook here when it comes to commercial real estate and reits, mike?
>> thank you. the long-term outlook is still very good. i think the basic point is that most people probably have too little exposure to commercial exposure as a asset class. 20 years ago it was difficult for the average investor be the institutions or the investors to access this asset class. >> before reits you had to buy a building, right? >> kpaktly. that's just not really possible for the average investor. and for institutions that can. it's still a better vehicle to do that. and so -- it's an asset class of most. if you buy a broad based stock. there are only 1% tor 2% of the s&p 500. you have to go out of your way to invest in reits. it's probably a good idea. because you're underinvested in the major asset class. >> my question is about the apartment area. we've seen rents on housing
doing well. people are having private equity funds and then we'll see an awful lot of an apartment and apartment buildings being built. is this the end of the apartment building cycle and more in the housing cycle? >> some of that is happening with you're right. we are still pretty bullish at green street for what lies ahead in terms of apartment fundamentals. we see the homeownership rate continuing to decline for a couple more years or so. today it's at 66%. i think it'll be 64% by the time it hits bottom. you still have a lot of people living in houses they can't afford. and so the trend for the next couple years is for great rental demand. but in the mean time the landlords can dictate rents. we expect rental growth to be
excellent this year. >> when we show people what you like, you've got a reit, equity rv reit, and extra space storage reit. why are those more important? i think reit investors are well aware of what i just said. 7% this year. but those other niches are niches that we think are position for the very well ffr the long run. so malls by way of example are doing great. at the high end. taubman owns. the good malls get better and the weak malls get worse. taubman's a strong play on that. the other two niches are niches that have done well. they're not well appreciated, but they're wonderful little
businesses. self-storage and manufactured housing. they're really neat little businesses. >> for the people playing the home game if they don't want to drill down to specific, vnq is that something you follow? >> it's a reasonable way for the individual to play the game. the reit space, there's over a hundred reits in the u.s. it's daunting for the retail nster to play in that space. i recommend either going with an etf. also a space where active managers do a good job. it's because you can really get a good estimate of the intrinsic value of a reit if you're willing to do the work. so whether it's through an active manager, a mutual fund, or through an index approach or etf, i think both are effective. >> good to see you. thanks for joining us. >> thank you. >> let's hit some second derivative trades on real estate. you're likely u.s. gypsum. >> i love it. has come right back.
the idea with u.s. gym sum and other names like mohawk which i'm long, these homes get turned into rentals. sherwin williams has been big this year. >> home depot for the last three or four years have done tremendous. we've talked about hd for a long time. i think hd is in a sweet spot for their business. given the move we've seen, given the fact the s&p is within a near shot of a high. >> those screens are so clear. hd. >> which ones? you've never been in a home depot in your life. >> i have. >> don't lie. >> lightbulbs. >> liar. >> i have. i love home depot. next on "fast money," a big call on the dollar.
plus a call from one of our traders last night could have made you big money today if you were watching. more "fast money" up next. ♪ ♪ here we are, me and you ♪ on the road ♪ and we know that it goes on and on ♪ [ female announcer ] you're the boss of your life. in charge of making memories and keeping promises. ask your financial professional how lincoln financial can help you take charge of your future. ♪ ♪ oh, oh, all the way ♪ oh, oh two of the most important are energy security and economic growth. north america actually has one of the largest oil reserves in the world.
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despite was chris says about the stress test being a joke, once we're past them that's going to be $9 billion. 2/3 is going to be buybacks. it's going to be concentrated in the biggest names. ic this best name is jpmorgan. i want to get bullish in jpmorgan. >> that was scott nations saying to buy jpmorgan calls for a dollar. if you'd done that today, how would you be doing today? scott, you nearly tripled your money if you made that trade. you feeling good? >> i'm feeling like guy adami on that one. >> i asked if you were feeling good, not bad. so what do you do now? >> i think the interesting thing about what these banks are going to do is so much of what they'll focus on is buybacks.
that's great for shareholders. it allows you to pick whether or not you want to be a seller rather than being -- getting a dividend, having a dividend put to you. if you want to sell into the buyback, then you can stay long these calls. you can deliver the stock. you can time when you want to actually sell these shares back. so i actually think the dividend is not necessarily as important as the sheer buyback. i like these. i think these buybacks are in all of these big stocks. so i would stay long. i'm not married to it, but i'd stay long. >> could move higher, because the price has gotten so much higher. >> that's a great point. and jpmorgan today says they might not buy back as much as they discussed today. that's absolutely a possibility. you won't know that happens until after it's already passed. until after they bought it back. >> this is a sell the news
event? >> yes. >> you're selling into this? you sold some today. >> i'm still long, but i had to sell some. >> scott, what about the action in options today? any increased activity before anybody knew anything? >> in the april 40 calls in jpmorgan, there was a bunch of buying today. all these banks saw options get much more expensive. they all had kbig call volume throughout the day. two, three, four times average. so there's plenty of call buying in all these. >> scott nations, thanks so much. up next a big call on the dollar. more "fast money" up next. [ female announcer ] you have plans, moments you're looking forward to. what if they were stolen from you? by alzheimer's. this cruel disease is the nation's sixth leading cause of death, affecting more than 5 million americans. the alzheimer's association has been behind every major advancement and continues to lead the fight against alzheimer's.
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next trade. our next guest says that the dollar has started to trade positively with risk assets. in a more favorable environment can persist the next two to three months. it's good to see you. it's a pretty dramatic change in the way the dollar has traded over the past couple years. right? >> absolutely. last five years we've been used to where risk on meant dollar down. now the last month or so we've seen it rally together. that's a big change. >> the bottom line, what do you
do with the dollar right now? >> i think we're in the process of seeing u.s. growth expectation shift somewhat high. i think that's something that is somewhat supportive of risk assets. the thing on near term then the dollar can get a bit further boost. not fully priced yet. >> i think we need to -- first of all, i agree with your long dollar position. but i think we need to define this risk on trade. if you look at commodities on a 15 day basis, 60 day basis, one year basis. they are all negative. inverse correlations. that did not go away. gold got crushed today. is that not a reason to be bearish? >> jens don't answer that yet. we have breaking news. >> ally financial today had the lowest performance on the stress tests. now out with a statement. they're taking a poke here at the process. take a listen to what ally is saying. they're saying ally financial supports the premise of continuing comprehensive reviews
to insure capital adequacy of financial institutions under a variety of scenarios. however, assumptions in the federal reserve's most recent report are inconsistent with the company's view in three key areas. they are saying the analysis dramatically overstates potential contingent mortgage risk. it does not reflect management's tack record and does not contemplate contingent capital that exists within ally's structure. the lowest performer in the stress test saying they have a bone to pick with the process. >> the second tough press release received. met life the other one. >> they're not happy with the way this is going down. >> making that very clear. so you asked something, keith. jens, do you want to answer that question? >> yeah. i think it is important to keep in mind there's a difference between growth in the u.s. and global growth. i agree in terms of global growth not everything is looking super great. in terms of risk assets that are related to u.s. growth, those
are trading pretty strongly. i think that's what matters for the outlook. >> what about aussie versus the u.s. dollar? what do you think about that trade there? >> so i think for the next two, three months you can be relatively broad based long the dollar. but you would have gone for a move in the 2% to 3% in terms of the dollar index. you should not go for a home run trade here. this is a tactical move that could extend a reasonable degree, but not a massive move. >> i'm so glad not to talk about europe. how much longer can i not talk about europe? what do i do with the euro in the meantime? >> i think the euro in a way has become the new dollar. i think funding is shifting towards the euro. and i think over time the consumer mind on where the euro becomes on the capital markets. that will be a huge shift over what we've seen over the last five years. where the dollar was the main
stress test that took everybody by surprise today? >> it was. i got to tell you. i think the whole thing is a joke. we look at the stress test what happened in 2009, that was -- people thought that was a joke as well. but citi was really on the verge of going under. and the fed was coming in and they were saying here is our plan to save citi. and we are going to use that as a game plan for every bank out there of the biggest ones. and anyone who fails the stress test, here's the plan we're going to use to capitalize you. these 19 banks are too big to fail. that was important. it was real. and they were under a significant amount of stress at that time. here -- >> but the unemployment, the huge decline in stock prices and housing prices, that's not stressful enough for you? or not relevant? >> it's not relevant. that's the point. at that time you had funding markets that were in disarray. you don't have that now. this is a giant waste of time. >> any other skeptics?
>> the big problem with citi is in their loan book. this is a big problem relative to what karen's talking about in the cycle. are you bullish on housing, home prices, what foreclosures -- >> hold on. steve has breaking news. >> thanks very much. a senior fed official in a background briefing to reporters explaining the early release of the data saying that the test release due to a concern about information leaking out earlier than had originally been planned. jpmorgan's announcement was a miscommunication with the fed. that's why we got it earlier saying no one was at fault. on the stress test, the senior official says that at least four banks, the four who failed were were required to submit plans. what is surprising is because of of other reasons, it sounded like more than four banks are going to have to resubmit their plans. also saying the capital of the banks have improved substantially over the past years. higher losses with the banks but then a process of negotiation happened and the official would
not comment on the met life criticism. only saying that the fed stress tests are mandated by law. i was surprised to hear karen say the stress test in '09 were a joke. they helped raise -- >> no, no. that's no what i said. >> she thought this one was a joke. she thought the 2009 one was not a joke. >> this one is harder than '09. by measures. >> but what was happening in the world at the time. banks really were in disarray. and many particularly citi on the verge of going under. it was very relevant right then. >> i second what karen is saying. it's a joke relative to where we're going. >> your first move tomorrow when we return. more "fast money" coming up next.